Correction: Corrects the sixth para to represent sales numbers in billionsDiversified chemical company Eastman Chemical Co. (EMN) reported Thursday a surge in first-quarter profit, helped by a 39% increase in revenues driven by improved sales volume, a favorable shift in product mix, and higher selling prices. Looking ahead, the company issued its guidance for the second quarter as well as full year 2010. Eastman shares gained more than 7.70% in the after-hour trading, following the news.

The Kingsport, Tennessee-based company reported net income for the first quarter of $101 million or $1.37 per share, compared to $2 million or $0.03 per share in the year-ago quarter.

Analysts expected the company to earn $1.15 per share for the quarter. Analysts estimates typically exclude special items.

Included in results for first quarter of 2009 were restructuring charges, net, of $26 million primarily for the discontinued Beaumont, Texas, industrial gasification project.

The company had anticipated its first quarter 2010 net income per share to be slightly higher than fourth quarter 2009 net income of $1.14 per share.

Sales revenue for the quarter increased 39% to $1.56 billion from $1.13 billion in the prior-year quarter, due to higher sales volume, a favorable shift in product mix, and higher selling prices.

During the first quarter the company's sales volume increased as a result of higher customer demand compared with the depressed levels in first quarter 2009 and the increase in selling prices was in response to higher raw material and energy costs.

In the immediately preceding quarter, Eastman Chemical posted a fourth-quarter loss that widened from last year, due to higher non-cash asset impairments and restructuring charges and a decline in revenue. Net loss for the fourth quarter was $32 million or $0.44 per share on revenues of $1.33 billion.

Sales from the Fibers segment improved 3% to $267 million, as a result of higher selling prices in response to higher raw material costs.

First quarter sales from the company's Performance Chemicals and Intermediates grew 58% to $483 million from last year, due to higher sales volume, higher selling prices and a favorable shift in product mix.

Sales from the company's Specialty Plastics segment rose 59% to $248 million, due primarily to higher sales volume and a favorable shift in product mix.

Operating income for the first quarter of 2010 totaled $182 million, up from $51 million excluding restructuring charges in first quarter 2009, on higher sales volume and higher capacity utilization which led to lower unit costs and a favorable shift in product mix.

First-quarter 2010 operating earnings included $12 million in sales revenue from an acetyl license and were negatively impacted about $25 million by the outage at the company's Longview, Texas, manufacturing facility.

The company had previously anticipated that the first-quarter earnings impact of the outage to be between $0.20 - $0.25 per share. The company, however, said the impact was expected to be mostly offset by higher than forecasted sales volume and operating margin.

During the quarter, Eastman Chemical signed a definitive deal to purchase Genovique Specialties Corp. from a New York-based private equity firm Arsenal Capital Partners for an undisclosed sum. The acquisition is expected to be accretive to Eastman's full-year 2010 earnings and is also expected to transform Eastman as a global leader in non-phthalate plasticizers for both general purpose and specialty markets.

Looking ahead for the second quarter, the company expects earnings to be in the range of $1.50 - $1.60 per share.

Further, the company anticipates its full year 2010 earnings to be between $5.00 and $5.25 per share, due primarily to the combination of the stronger recovery in 2010 and the strategic actions it has taken.

Commenting on the outlook, Eastman Chemical's president and chief executive officer, Jim Rogers said, "During the first quarter, there were clear signs of a global recovery in our sales volume. Looking forward, we expect to continue to benefit from improved sales volume and higher capacity utilization which results in lower unit costs. We also expect raw material and energy costs to remain volatile."

Eastman Chemical shares closed Thursday's regular trading session at $67.12, up $0.43 or 0.64%, on a volume of 0.86 million shares. Further, the stock gained $5.17 or 7.70% and traded at $72.29 in after hours.